If so, the Federal Tax Credit for 1st time homebuyers, of up to $8000 will come to an end on November 30. With September almost here, that gives buyers about 90 days to find a house, write an offer, get an accepted deal, have it financed, get it closed and have title transferred all before the November 30 deadline.
You might think that is plenty of time, but keep in mind the typical transaction now is either a short sale or a foreclosed, lender-owned property. Either could take weeks to obtain an accepted offer, with more time needed for repairs and other issues. The typical 30 day from offer-to-closing contract is a thing of the past, at least for now.
Thus, a typical 1st time homebuyer might need to make numerous offers and then do it all again if an appraisal comes in lower, repairs are overwhelming or any other reason why a sale might fall apart.
Remember that the federal program offers a tax “credit”, not a deduction. There is a difference, but be careful in giving tax advice to your buyers. If you have any serious, potential 1st time homebuyers, then have them first visit with their accountant to determine the benefit available to them at this time. Once they are comfortable with that, then start showing them houses.
A word of caution; be careful what you promise… Promising the credit to a buyer who ultimately does not receive it will be an issue you will need to defend. Always tell your buyers that they must comply with the federal requirements and that you have no control over how the credit is applied. For example, if you sell them a house with a November 30 closing, and for some odd reason, it closes December 1, they will not receive the credit. If you promised they would, you could find yourself if a very uncomfortable position.
